First published at Nieman Journalism Lab
Some people will tell you that that they're tired of hearing about the digital circulation successes of The New York Times, the Financial Times, and The Wall Street Journal. Their successes are great, but their applicability to other dailies is minimal, the thinking goes. There's some truth there, of course: The sheer scale of those enterprises makes the revenue impact really impressive. But the fact is that hundreds of dailies of all sizes all around the world are busily constructing digital circulation strategies.
At a time when it is becoming harder to find companies that don't have paywall plans than those who do - just this week 41 Polish titles organized themselves into a buying co-op, using Piano Media - let's go micro this week and consider the newsonomics of one new digital pay system. Within the thinking of Israel's first paywall, we see the challenges of the moment, the calculations, and the 2012 sense of testing and experimentation - and how digital circulation and reader focus is actually providing a rationale for hiring journalists and producing more original, unique content ("The Newsonomics of Majority Reader Revenue").
Haaretz is Israel's oldest daily, founded in 1918. Amid all the tribulations of Israeli and Middle Eastern history over the next century, it's often been a valued, rational voice. In short, it's more about journalism than partisan view. Since 1997, it has carried The New York Times' International Herald Tribune within its daily English-language edition. As a daily newspaper, it faces all the challenges of its contemporaries around the world: declining print circulation, loss of print ad revenue, and a rocky transition into the future.
Haaretz put up its digital circulation system in April, offering 10 free articles a month of proprietary content; breaking news remains free to view. Though its English-language circulation is a relatively small percentage of its Hebrew-language edition's, it launched its first paywall around the English edition. Now, it aims to soon extend that system, with early learnings, to the main edition. Therein comes the first lesson that all publishers can learn from: Start small and test, if and as you can.
The early English-language numbers are small by one measure, but impressive by others. "We signed up 1,500 subscribers in the first two days," says Lior Kodner, head of digital. "We thought it would take months."
Fifteen hundred isn't a large number, but in the roughly six months since paywall launch, Haaretz English-language digital subscriber total now surpasses its print number. That number isn't publicly released, but we can estimate it's less than 10,000.
In anticipation of its paywall marketing, Haaretz added original English-language content. Until paywall planning got real, Haaretz's English-language edition has been a translation of its Hebrew-language journalism. Even though Haaretz has cut dozens of other positions as revenues declined overall, Haaretz added 10 positions, seven of them full-time, based in New York, London, and Israel. The positions include a focus on investigative and in-depth reporting. In addition, the website moved to 24/7 coverage.
That new content - even with a paywall - has meant an increase of traffic of 5-10 percent, Kodner says.
Haaretz borrowed its pricing strategy from The New York Times. Along with $2 a week (with an annual commitment) or $2.38 a week (with a monthly commitment), it offers the usual $1 a week intro rate for the first month. Seventy-two percent of subscribers take the annual offer.
If you receive the six-day-a-week print edition in Israel, digital access is now included, part of its all-access offer. If you subscribe to the weekend (Friday) paper, you get digital access for half-price. It also borrowed ideas from the Journal and the FT, including this FT-like grid showing readers their options and what they get for their money very specifically.
About 30 percent of print subscribers have signed up for digital access, with smartphone usage already exceeding web use.
Why start with the English-language product? "This audience is more familiar with paywalls, and paying for content," says Kodner. "Our Israel audience is not ready yet."
The Hebrew language paper is clearly the main business, at 60,000-plus circulation. While no date has been set for a paywall for that content, "English is the test case for Hebrew," Kodner says, and work is proceeding towards that launch.
Haaretz is taking great care as it proceeds: Its influential paper can cost more than three times what other dailies do, and there's newer competition. Sheldon Adelson, in the news lately for bankrolling Republican candidates in the U.S., publishes the pro-government free daily Yisrael Hayom. That freebie, plus the usual assortment of newspaper pressures, is causing chaos overall in Israeli newspapering. Digital circulation for Haaretz, as increasingly is true around the world, is seen as a survival strategy. Circulation now accounts for about 60 percent of total revenues, up from 50 percent just a year or so ago, given the ad revenue turndown.
We can derive larger, even universal, truths from the Haaretz experience:
- If you don't charge them, they won't pay. Simply making a wanted product paid brought in early and sustained money. The fact that 1,500 people subscribed within two days parallels a common finding of the pay revolution: There's a substantial core of customers who will pay even before they hit a paywall. Haaretz finds that a third of subscribers pay up early. Just tell them that it's now paid content, and they ante up.
- Make mobile real. In July, it added an iPad app (joining iPhone and Android apps, which launched last November) in advance of the pay system. It has begun using the power of the device, offering a tablet-friendly recounting of the history of Oswiecim, the town in southern Poland where Auschwitz was constructed. So far, it's seen more than 15,000 downloads of the iPad app.
- Build a database, early. When Haaretz offered its free phone apps, it required registration. That gave it a database of 60,000 users - of great use when the paid program launched.
- Monetize far-flung audiences. Eighty percent of Haaretz's English-language online audience lives in the U.S. and Canada. Print economics didn't justify North American printing of editions. The audience was there, the brand identification was real, and the willingness to pay existed. A digital circulation system provided a new revenue on-ramp. Language provides one segmentation of customers; geography provides another. In the U.S., as baby boomers retire or flee south for winters, the snowbird market, long talked about, may now become real through targeted, seasonal, paid content.
- You'll find customers in odd places. Haaretz is finding new paying customers in the wider Middle East - in Kuwait, in Lebanon, and in Iran. "We got people from Iran who complained to us online that our checkout system didn't work. "It turned out that their government is blocking the transaction," says Kodner.
- Back up your offer with…journalism. It's tough to talk cost-cutting publishers into new investments in journalists. But Haaretz took that step to fortify a business opportunity. Too often, publishers have gone to the pay market with newly cutback products - ones that hardly generate enthusiasm among customers. As with investing in news video ("The Newsonomics of Leapfrog Video"), publishers must add as well as subtract if they are to find a path to growth. "You can't just say to people it's time to pay. You have to give them a reason to pay," says Kodner.
So far, we've seen widely varying paywall results. At worst, digital circulation strategies are stabilizing circulation revenues. At best, we see companies like The New York Times and Star-Tribune reaching for high-single-digit increases in circulation revenue. As we go forward throughout the next year, we're seeing a real playbook being written - a basic checklist of a dozen or so strategies that make all the difference in revenue success. Haaretz now contributes to that playbook.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.